Lansing Update: March 18, 2011

In This Week’s Lansing Update:

1. MCC Testifies Against Welfare Reform Legislation
2. MCC to Testify in Support of EITC Next Week

MCC Testifies Against Welfare Reform Legislation

Michigan Catholic Conference this week urged the House Families, Children and Seniors Committee to abandon efforts to reform the state’s Family Independence Program (FIP), which provides state assistance to poor families with children.

The legislation, House Bills 4409 and 4410, seeks to:

• Institute a 48-month hard deadline, with few exceptions, for public assistance;
• Remove the exemption on participation in the DHS Jobs, Education and Training (JET) program for counties which have substantially higher unemployment than the rest of the state; and
• Amend the penalty for a third occasion of noncompliance from a one year prohibition to a lifetime ban.

With Michigan’s budget deficit for the 2012 Fiscal Year sitting at $1.7 billion, the Republican administration and Legislature are looking to cut costs wherever possible in order to provide a tax cut for businesses in the state. MCC explained to the committee that less than one percent of FIP caseloads are in non-compliance, whereas if this legislation were to pass 12,500 individuals and their children would immediate be cut off from state assistance.

This is the third time in less than six years that the Legislature has sought to reform the state’s assistance program. In 2005, the Legislature sent to Governor Granholm bills that included excessively harsh penalties and sanctions. While the bills were vetoed, legislation did become law in 2006 that limited the time frame for which individuals could receive assistance to 48 months, however, the legislation did include several exemptions for destitute individuals.

No vote was taken on the measures before the committee. To read more about the Conference opposition to recent welfare reform efforts, click here.

MCC to Testify in Support of EITC Next Week

The House Tax Policy Committee has scheduled a hearing next week to discuss the state’s tax structure, and MCC is prepared to testify at the meeting in support of the state Earned Income Tax Credit (EITC).

The Michigan EITC allows low-income workers to claim 20 percent of the federal earned income tax credit on their state tax return. The tax policy is the Conference’s number one priority this session, despite legislative efforts to eliminate the credit due to the state’s budget deficit. The EITC’s cost to the state, if eliminated, would be redirected to help pay for a $1.7 billion tax cut for businesses.

Numerous studies have indicated that the EITC at the state level helps to raise awareness of the federal credit, both of which move more low-income families and their children out of poverty than any other tax policy. The Conference was a leading supporter of the credit when it was enacted in 2006, which has since been under attack due to the state’s fiscal doldrums.

Recent polling has indicated up to 75 percent of the public support [Link no longer available —Ed.] preserving the state EITC, and studies have shown that roughly 14,000 children of current EITC recipients will plunge into poverty if the credit is eliminated.

The House Tax Policy Committee will meet Tuesday, Marcy 22 at 2:30 p.m. and Wednesday, March 23 at 10:30 a.m. in room 510 of the House Office Building in Lansing. An action alert in support of preserving the EITC can be found here [Link no longer available —Ed.]. It only takes a moment to write your legislator in support of this important policy. Tax Policy Committee members and their contact information are also listed below.

House Tax Policy Committee Members